The IRS is cracking down on millionaires and large partnerships using AI to hunt for unreported income and suspicious deductions.
According to the IRS Commissioner, they aim to catch those who have “cut corners” by conducting stringent audits on selected returns. With AI’s ability to quickly analyze massive data, here are some red flags the IRS will likely target:
Cash-based businesses like restaurants not reporting all cash sales. They’ll compare revenue to supply costs for inconsistencies.
Individuals/businesses with foreign dealings – checking for income shifted offshore to low-tax countries.
Perpetual late filers, especially those with incomes over $250K.
Disproportionately high travel/meals deductions after entertainment expenses were disallowed in 2018.
Partnerships with high unreimbursed partner expenses, which can disguise personal costs.
The bottom line? Tighten up your records and ensure all deductions are legitimate and properly documented to withstand audit scrutiny.
